American ports are way behind in adopting technological advances that have revolutionized shipping in other countries. Learn more inside.
The day may not be far away when a drone delivers packages right to your doorstep, perhaps only hours after you’ve clicked the “Ship It” button on your favorite online shopping site.
But goods just don’t materialize out of thin air (though thanks to technology, it’s begun to seem that way).
They come to us via the centuries-old network of shipping ports that, at least those in America, are among the least technologically sophisticated operations in the world.
Perhaps the last great leap in technology for many ports was the deployment of containers—big ugly metal boxes with the same distribution point that were packed with sometimes dissimilar goods.
The first containers were shipped in 1956 by an old oil tanker retrofitted to accommodate 58 of the 30-foot-long boxes, which led to SeaLand, the first dedicated container carrier service. The whole idea came to American trucking magnate and SeaLand founder Malcolm McLean almost twenty years earlier.
According to The Economist, McLean had delivered cotton bales to a port in Hoboken and was waiting around waiting the stevedores unload his truck and then reload the bales onto a ship.
"It struck me that I was looking at a lot of wasted time and money (as they) took each crate off a truck and slip it into a sling, which would then lift the crates into the hold of the ship. Once there, every sling had to be unloaded, and the cargo stowed properly. The thought occurred to me…that it would be easier to lift my trailer up and, without any of its contents being touched, put it on the ship."
Containing Costs in the Shipping Industry
Not only did containers simplify and expedite the loading process, they also protected against theft and spoilage because the boxes were packed and sealed at the factory. So insurance costs came down as well as labor expenses. The container system also improved productivity because of uninterrupted, 24/7 operation that greatly reduced the chance of worker fatigue or human errors.
But more than half a century later, most American ports haven’t improved their shipping processes much beyond the introduction of containers, unlike their counterparts in other high-wage developed countries.
Stated reasons include the high costs of implementing new technology as well as resistance from the International Longshore and Warehouse Union (ILWU) which, as the Los Angeles Times reports, could close down not just one port but all ports in a strike to stave off technologies that could affect staffing and salaries. Erik Anderson of KPBS reports that a West Coast dockworkers strike could cost as much as $2 billion a day. Not surprisingly, the ILWU has historically opposed new technologies such as computer tracking of cargo and containerization itself, and conceded to their use only in return for higher salaries for existing jobs.
As Priceonomics points out, there are three key components to a port’s loading/unloading system—gantry cranes, transport vehicles and stacking cranes. In the United States, these are all operated by large teams of dockworkers, whose jobs are protected by the union. That’s what a union is supposed to do, just as automation is supposed to make tasks not only more efficient but safer.
Joc.com notes that automated terminals in Rotterdam improve vessel productivity by 40 percent; moreover, automatic locking systems eliminate the danger to dockworkers who climb among a stack of containers to unlock them as a prerequisite to unloading.
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Challenges to Implementing Port Automation
To be fair, it is not simply a case of a union resisting automated threats to job security. Implementing automated shipping technology is very expensive. Ryan Petersen, writing in Flexport, notes that the build cost of the Rotterdam port, considered the most advanced automated terminal in the world, was over $535 million. Upgrading to fully automated terminals for American ports could similarly cost over a half a billion dollars.
That said, automation of American ports is more likely than not. Just as containers revolutionized shipping back in the mid-twentieth century, disruptive technological advances can only be resisted for so long. As the rest of the world adopts new techniques that make business more efficient, the pressure increases on American industry to catch up. Jobs will likely be eliminated.
But, as Katie Allen reports in The Guardian, new technologies historically create more jobs than they eliminate. Moreover, technology increases spending power, and when more people have more money to spend on goods, the need to ship those goods as efficiently and effectively as possible increases.
As Ryan Petersen says, “Shipping technology advancements have shown themselves time and again to be capable of creating a more prosperous, peaceful world. Difficult as the transition toward port automation may be, we can’t afford to shy away from the challenge.”